Student-loan deal emerging in Senate

Senators have reached a tentative deal to set student-loan interest rates based on the market, a day after shooting down a proposal to freeze those rates at 3.4% for a year.

The Washington Post reports that a bipartisan group of senators are proposing to tie rates for all federal loans for undergraduate students to the 10-year Treasury note, plus 1.8 percentage points. For graduate students, it would be the Treasury rate plus 3.4 percentage points.

Rates would be capped at 8.25% for undergraduates and 9.25% for other loans, aides told the Post.

The House passed a bill tying rates to the 10-year Treasury, and President Barack Obama has supported a similar idea in the past.

Rates doubled to 6.8% on July 1, and lawmakers have been struggling to reach a compromise ever since.